By FX Empire.com
Although investors were disappointed by Slovakia’s decision to reject the enhancement of the European bailout, gains are seen across the currency and commodity markets after a statement from the European Union, the IMF and the ECB indicated that Greece made “important progress” so it’s likely that it will get the 8 billion euro tranche next month.
Slovakia, one of the smallest members of the euro region, is the only country that hasn’t approved the revised European Financial Stability Facility (EFSF). This intensified worries that Europe will fail to contain the debt crisis and Greece could default. Thereby losses were seen across the European stock markets this morning, and parts of Asia.
While stocks in Japan, Australia, New Zealand, Taiwan and Thailand fell, stocks in Hong Kong, China and South Korea rose today after a Chinese governmental investment fund announced buying shares in four major banks, which could strengthen China’s undervalued stock market. The MSCI Asia Pacific Index was little changed today at 115.74 at 14:11 inTokyo.
In the afternoon hours the European stock markets rebounded where the FTSE 100 rose as of this writing 0.24%, DAX rose 1.32% and CAC 40 rose 1.07%. An additional upside support was given today by hopes that the upcoming U.S. corporate earnings reports will be positive, and by the second vote from Slovakia on the EFSF set for the end of this week.
Since Slovakia’s approval on the enhancement of the European bailout is crucial for adopting the strategy that would prevent the spread of the debt crisis from Greece to other countries in the region, sentiment received a big blow early this morning, yet investors continue to be confident that officials will be able to contain the crisis by a recapitalization of the banking system.
Thereby the euro rose sharply today trading around 1.3785 as of this writing, while the pound is trading around 1.5760 from the opening at 1.5575 although a report released from U.K. today showed that unemployment rose to the highest in 15 years to 8.1%. However this report ignited speculations that BoE might increase once again its Asset Purchase Facility.
Meanwhile the dollar index fell as of this writing to 76.88 from the opening at 77.67, as markets await the release of the FOMC meeting minutes later today, while the American Senate blocked Obama’s $447 billion jobs plan. The dollar’s decline facilitated the commodities incline, where gold is trading around $1685.40 per ounce while oil is trading around $86.50 per barrel.
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